Khazanah Nasional Bhd plans to take Malaysia Airlines (MAS) private as the first step in a major restructuring of the loss-making airline, following the disappearance of its flight MH370.
A delisting would make way for Khazanah to revive the ailing carrier, possibly by selling off its profitable engineering, airport services or budget airline units, minimizing its bloated payroll and installing a new management team.
The restructuring and potential sale of MAS is politically fraught due to heavy opposition to job losses from its powerful labour union, which has prevented previous revival plans, and its status as national carrier.
At MAS’s price of 21 sen per share, majority shareholder Khazanah would only need to pay RM1.05bil for the 30.6% of shares it does not already own.
Khazanah’s board is planning to meet at the end of this month to discuss the plan, one of the people said, adding that an announcement would be made by the end of this year.
The sources declined to be identified because of the sensitivity of the issue.
Khazanah is working with CIMB Investment Bank on the restructuring, the sources added, but cautioned that the plan is subject to change depending on the ultimate decision by the Government.
Khazanah would unveil plans within six to 12 months to restructure the airline, which has been squeezed into three straight years of losses by intense competition locally and on long-haul flights.
Hit by deteriorating ticket sales in the wake of the disappearance of MH370 on March 8, the company turned in its worst quarterly performance in two years in the January to March period and is currently burning through its operating cash. Its shares have fallen 16% compared to a 2.8% gain in the benchmark stock exchange index.
Taking MAS private could enable Khazanah to restructure it with little interference from shareholders and the powerful airline union, analysts say.